The cost of living in the UK is going through the roof, with the prices of some items rising above inflation. For many, life seems to be getting less and less affordable. This can mean that saving is difficult, and trying to get a mortgage deposit together feels almost impossible, especially as house prices are rising at exponential rates. To see how bad the situation really is, we have compared the prices of common items to see how they have changed over the last 40 years and how they compare to inflation.
Finder’s historical price tracker
Finder’s historical price tracker found that house prices have increased by 1,001% since 1980. This is roughly 4 times the rate of inflation, which rose by 255%. These high prices make saving for a house difficult, which explains why Brits are turning to renting more frequently than before.
It’s not only house prices that are sitting far above inflation. In fact, over the past 40 years, the cost of both first-class stamps and petrol has risen by 483% and 352% respectively. The cost of a pint of milk and loaf of bread has also increased, but at a rate lower than inflation, with the cost of these items rising by 158% and 191% since 1980 respectively, making them cheaper than they should be compared to inflation.
Only one item grew by more than inflation in 2019. This was first-class stamps, whose cost rose by 4.48%, almost 2.5 times the inflation rate, which only rose by 1.74%. All other items sat below inflation, including house prices, which only increased by 0.99%. This is a rare occurrence, as house prices have increased more than inflation for 26 of the 40 years analysed in the study. Most of the other items increased in price during 2019 (but by less than inflation), though the cost of both petrol and a loaf of bread decreased in price by 1.4% and 3.77% respectively.
Finder’s banking and mortgage expert Matthew Boyle’s advice:
“The cost of goods and cost of living is becoming more and more expensive in relation to what we are earning. This, coupled with the COVID-19 pandemic and very low interest rates, means that it’s harder than ever to save up and make big purchases like a home. However, if you’re looking to get some extra money in your savings pot, there are some things you can do to boost the amount that you put in.
Come to terms with your spending Apps like Yolt and Emma let you manage multiple accounts at once and give real-time spending updates so you can keep on top of what you are spending.
Start micro-saving every day Apps like Money Dashboard and Moneybox help you create realistic savings targets, invest spare change and help you avoid being overcharged on bills. The popular challenger bank Monzo also has a ‘pots’ feature that lets you open several pots at once and the money held in them is kept away from your overall balance so it’s not accidentally spent.
Learn from new habits and save money everyday Lockdown has meant that many of us are now working from home. Our recent research found that Brits are saving £44 per week by not going into the office. Those that are still working from home will have saved £1,012 because of this during lockdown. This highlights how costly going to the office can be. If and when you decide to go back to the office, cut down on buying lunches and coffees and put the money you save away.
Making sure your savings are in the right place If you are managing to save, ensure that your savings aren’t sitting in a current account without an interest rate. Despite interest rates being at an all time low, they’re still better than not putting your money to work at all. If you’re willing to take a risk with your money, then placing your savings in a stocks and shares individual savings account may be a good idea if you really want to see your money grow. On average, over the last 50 years, stocks and shares ISAs have returned 5.4%, whereas savings accounts have returned just 1.9%. However, there is a chance that this could result in losing money if the value of stocks fall.”
Using data from the below sources, Finder worked out the percentage increases in the prices of several common items and compared them to the inflation rate over time.
Data sources: Land Registry, ONS, Royal Mail and House of Commons Library
For all media enquiries, please contact
Matt Mckenna UK communications manager T: +44 20 8191 8806
Matthew Boyle is a mortgages and home services publisher at Finder. He has a 7-year history of publishing helpful guides to assist consumers in making better decisions. In his spare time, you will find him walking in the Norfolk countryside admiring the local wildlife.
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